Monday, 14 March 2016

A few weeks ago the European Central Bank (ECB) published its financial accounts for 2015. Following last year's indulgence, the ECB spending spree continues despite the ever-growing debt problems facing the eurozone at large. An extravagant brand new skyscraper and the launch of the Single Supervisory Mechanism (SSM) explain many of the cost increases during the year ultimately paid for by citizens of the member countries.

During 2015, total administrative expenses increased a whopping €187 million, or 27.5%, to €864 million. According to the ECB, "This increase was mainly due to the commencement of the depreciation of the ECB’s main building and higher costs incurred in connection with the Single Supervisory Mechanism (SSM)."

The largest contributor to this increase in total administrative expenses was staff costs which increased by almost €140 million, or 46.4%, "...mainly owing to the higher average number of staff employed by the ECB, as well as the higher net expense in relation to post-employment benefits and other long-term benefits" according to the ECB.Staff costs per head increased to €153,551, up 31.4% on 2014.

The depreciation costs associated with now housing ECB staff in a magnificent brand-new skyscraper, built during a period when austerity was imposed on many eurozone members (and still is), increased nearly €49 million, an increase of more than 318% compared to 2014.

Furthermore, total administrative expenses have now nearly doubled since 2012, an increase of more than €400 million in just three years.

Source: ECB, EcPoFi

Of course, the introduction of the SSM does not mean member countries are now spending less monitoring their domestic banks. On the contrary, they're likely having to spend more just to follow up and implement the dictates launched from the ECB ivory tower. The doubling up of costs, and hence increased bureaucracy, is a hallmark of the eurozone and the EU, just as it is for any other large-scale central planning project. The bureaucrats win, while the rest have to work harder and save less to pay for the extravagance.

Do remember that the above are just some of the direct costs involved in "running" this wonderland for bureaucrats. It's truly shocking just how quickly the citizens of Europe forgot about the Soviet Union, isn't it.